TORONTO, ONTARIO--(Marketwired - Nov. 11, 2014) - Canadian Apartment Properties Real Estate Investment Trust ("CAPREIT") (TSX:CAR.UN) announced today strong operating and financial results for the three and nine months ended September 30, 2014.
| Three Months Ended | Nine Months Ended | |||||||
| September 30 | September 30 | |||||||
| 2014 | 2013 | 2014 | 2013 | |||||
| Operating Revenues (000s) | $ | 126,356 | $ | 119,995 | $ | 378,300 | $ | 353,005 |
| Net Operating Income ("NOI") (000s) (1) | $ | 77,615 | $ | 72,855 | $ | 227,079 | $ | 207,821 |
| NOI Margin (1) | 61.4% | 60.7% | 60.0% | 58.9% | ||||
| Normalized Funds From Operations ("NFFO") (000s) (1) | $ | 46,707 | $ | 44,263 | $ | 136,733 | $ | 123,031 |
| NFFO Per Unit - Basic (1) | $ | 0.426 | $ | 0.440 | $ | 1.252 | $ | 1.227 |
| Weighted Average Number of Units - Basic (000s) | 109,684 | 100,576 | 109,207 | 100,251 | ||||
| NFFO Payout Ratio (1) | 71.0% | 67.1% | 71.5% | 71.0% | ||||
| (1) | NOI, NFFO and NFFO per Unit are measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Financial Measures" and the reconciliations provided in this press release. |
- Strong occupancies, increased average monthly rents, contributions from acquisitions, drive 5.3% and 7.2% increase in revenues in third quarter and nine months ended September 30, 2014, respectively
- Average monthly rents for same residential properties up 2.5% in 2014 compared to last year
- Portfolio occupancy remains strong at 98.4%
- NFFO up 5.5% in third quarter, 11.1% for nine months ended September 30, 2014
- Continued accretive growth as NFFO per Unit for nine months ended September 30, 2014 up 2.0% despite 9% increase in the weighted average number of Units outstanding.
- Same property NOI up 3.7% and 4.8% for the three and nine months ended September 30, 2014, respectively
- NOI margin increased to 61.4% and 60.0%, respectively, for the three and nine months ended September 30, 2014
- Closed mortgage refinancings (excluding acquisitions) for $563.8 million in 2014, including $318.4 million for renewals of existing mortgages and $245.4 million for additional top up financing with a weighted average term to maturity of 8.8 years, and a weighted average interest rate of 3.21%.
"Our strong operating performance continued in the third quarter as increased average monthly rents, nearly-full occupancies and further growth in same property net operating income drove strong increases in our key performance benchmarks," commented Thomas Schwartz, President and CEO. "Looking ahead, we believe we will generate another record year in 2014."
| Three Months Ended | Nine Months Ended | |||||||
| September 30 | September 30 | |||||||
| 2014 | 2013 | 2014 | 2013 | |||||
| Overall Portfolio Occupancy (1) | 98.4% | 98.5% | ||||||
| Overall Portfolio Average Monthly Rents (1),(2) | $ | 969 | $ | 1,003 | ||||
| Operating Revenues (000s) | $ | 126,356 | $ | 119,995 | $ | 378,300 | $ | 353,005 |
| Net Rental Revenue Run-Rate (000s) (1),(3),(4) | $ | 487,244 | $ | 462,958 | ||||
| Operating Expenses (000s) | $ | 48,741 | $ | 47,140 | $ | 151,221 | $ | 145,184 |
| NOI (000s) (4) | $ | 77,615 | $ | 72,855 | $ | 227,079 | $ | 207,821 |
| NOI Margin (4) | 61.4% | 60.7% | 60.0% | 58.9% | ||||
| Number of Suites and Sites Acquired | 339 | 1,108 | 341 | 1,881 | ||||
| Number of Suites Disposed | - | 604 | 338 | 604 | ||||
| (2) | Average monthly rents are defined as actual rents, net of vacancies, divided by the total number of suites and sites in the portfolio and do not include revenues from parking, laundry or other sources. |
| (3) | For a description of net rental revenue run-rate, see the Results of Operations section in the MD&A for the three and nine months ended September 30, 2014. |
| (4) | Net rental revenue run-rate and NOI are measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Financial Measures" and the reconciliations provided in this press release. |
Operating Revenues
For the three and nine months ended September 30, 2014, total operating revenues increased by 5.3% and 7.2%, respectively, compared to the same periods last year primarily due to the contribution from acquisitions, higher average monthly rents, and continuing strong occupancies. For the three and nine months ended September 30, 2014, ancillary revenues, including parking, laundry and antenna income, rose by 5.4% and 8.9%, respectively, compared to the same periods last year, due to contributions from acquisitions and Management's continued focus on maximizing the revenue potential of its property portfolio.
CAPREIT's annualized net rental revenue run-rate as at September 30, 2014 increased to $487.2 million, up 5.2% from $463.0 million as at September 30, 2013 primarily due to acquisitions completed within the past twelve months and strong increases in average monthly rents. Net rental revenue run-rate net of dispositions for the twelve months ended September 30, 2014 was $473.0 million (2013 - $434.2 million).
| Portfolio Average Monthly Rents ("AMR") | ||||||||||||
| Total Portfolio | Properties Owned Prior to September 30, 2013 |
|||||||||||
| As at September 30, | 2014 | 2013 | 2014 | 2013 (1) | ||||||||
| AMR | Occ. % | AMR | Occ. % | AMR | Occ. % | AMR | Occ. % | |||||
| Average Residential Suites | $ | 1,080 | 98.6 | $ | 1,058 | 98.4 | $ | 1,081 | 98.6 | $ | 1,055 | 98.5 |
| Average MHC Land Lease Sites | $ | 354 | 97.6 | $ | 451 | 99.3 | $ | 461 | 99.5 | $ | 451 | 99.3 |
| Overall Portfolio Average | $ | 969 | 98.4 | $ | 1,003 | 98.5 | $ | 1,025 | 98.7 | $ | 1,000 | 98.5 |
| (1) | Prior period's comparable AMR and occupancy have been restated for properties disposed of since September 30, 2013. |
Average monthly rents for residential suites increased by 2.1% to $1,080 and occupancy increased to 98.6% as at September 30, 2014 due to ongoing successful sales and marketing strategies and continued strength in the residential rental sector in the majority of CAPREIT's regional markets. For the Manufactured Housing Community ("MHC") land lease portfolio, average monthly rents decreased to $354 as at September 30, 2014, compared to $451 as at September 30, 2013, primarily due to the recent acquisitions in lower rent geographic regions. Occupancy for the MHC portfolio was 97.6% at September 30, 2014 compared to 99.3% the same period last year.
Average monthly rents for residential suites owned prior to September 30, 2013 increased as at September 30, 2014 to $1,081 from $1,055 as at September 30, 2013, an increase of 2.5% from the same period last year with occupancies rising to 98.6% from 98.5%.
| Suite Turnovers and Lease Renewals | ||||||
| For the Three Months Ended September 30, | 2014 | 2013 | ||||
| Change in AMR | % Turnovers | Change in AMR | % Turnovers | |||
| $ | % | & Renewals (1) | $ | % | & Renewals (1) | |
| Suite Turnovers | 36.2 | 3.4 | 9.5 | 27.1 | 2.6 | 9.9 |
| Lease Renewals | 17.6 | 1.6 | 27.2 | 28.0 | 2.7 | 27.4 |
| Weighted Average of Turnovers and Renewals | 22.4 | 2.1 | 27.7 | 2.7 | ||
| For the Nine Months Ended September 30, | 2014 | 2013 | ||||
| Change in AMR | % Turnovers | Change in AMR | % Turnovers | |||
| $ | % | & Renewals (1) | $ | % | & Renewals (1) | |
| Suite Turnovers | 32.6 | 3.0 | 22.0 | 22.7 | 2.2 | 22.6 |
| Lease Renewals | 17.4 | 1.6 | 63.1 | 28.7 | 2.7 | 61.9 |
| Weighted Average of Turnovers and Renewals | 21.3 | 2.0 | 27.1 | 2.6 | ||
| (1) | Percentage of suites turned over or renewed during the period based on the total number of residential suites (excluding co-ownerships) held at the end of the period. |
The lower rate of growth in average monthly rents on lease renewals during 2014 compared to the prior year is primarily due to the lower mandated guideline increases for 2014 (Ontario - 0.8%, British Columbia - 2.2%), compared to the higher guideline increases in 2013 (Ontario - 2.5%, British Columbia - 3.8%), partially offset by increases due to above guideline increases ("AGI") achieved in Ontario. Increased portfolio diversification helped mitigate the lower guideline increases. Management continues to pursue AGI applications where it believes increases are supported by market conditions above the annual guideline to raise average monthly rents on lease renewals. For 2015, the permitted guideline increase in Ontario has been increased to 1.6%, and the permitted guideline increase in British Columbia has been increased to 2.5%.
NON-IFRS FINANCIAL MEASURES
| Operating Expenses | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30 | September 30 | ||||||||||||
| ($ Thousands) | 2014 | %(1) | 2013 | %(1) | 2014 | %(1) | 2013 | %(1) | |||||
| Operating Expenses | |||||||||||||
| Realty Taxes | $ | 14,308 | 11.3 | $ | 13,883 | 11.6 | $ | 42,267 | 11.2 | $ | 41,365 | 11.7 | |
| Utilities | 9,554 | 7.6 | 8,684 | 7.2 | 38,366 | 10.1 | 34,283 | 9.7 | |||||
| Other `(2) | 24,879 | 19.7 | 24,573 | 20.5 | 70,588 | 18.7 | 69,536 | 19.7 | |||||
| Total Operating Expenses | $ | 48,741 | 38.6 | $ | 47,140 | 39.3 | $ | 151,221 | 40.0 | $ | 145,184 | 41.1 | |
| (1) | As a percentage of total operating revenues. |
| (2) | Comprises R&M, wages, general and administrative, insurance, advertising, and legal costs. |
Operating Expenses
Overall operating expenses as a percentage of operating revenues improved to 38.6% and 40.0%, respectively, for the three and nine months ended September 30, 2014 compared to 39.3% and 41.1% for the same period last year, due to lower realty taxes, repairs and maintenance ("R&M"), and insurance costs partially offset by higher utility costs as a percentage of operating revenues.
Net Operating Income
In the three months ended September 30, 2014, NOI improved by $4.8 million or 6.5%, and the NOI margin increased to 61.4% from 60.7% for the same period last year. For the nine months ended September 30, 2014, NOI increased by $19.3 million or 9.3%, and the NOI margin increased to 60.0% compared to 58.9% for the same period last year. The increase in NOI margin for the three and nine months ended September 30, 2014 was primarily the result of higher operating revenues, lower realty taxes, R&M, and insurance costs partially offset by higher utility costs.
For the three and nine months ended September 30, 2014, operating revenues for stabilized suites and sites increased 2.4% and 3.0% respectively, while operating expenses increased 0.4% and 0.3%, respectively, compared to the same periods last year. As a result, for the three and nine months ended September 30, 2014, stabilized NOI increased by a significant 3.7% and 4.8%, respectively, compared to the same periods last year.
NON-IFRS FINANCIAL MEASURES
| Three Months Ended | Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2014 | 2013 | 2014 | 2013 | |||||
| NFFO (000s) | $ | 46,707 | 44,263 | $ | 136,733 | $ | 123,031 | |
| NFFO Per Unit - Basic | $ | 0.426 | $ | 0.440 | $ | 1.252 | $ | 1.227 |
| Cash Distributions Per Unit | $ | 0.290 | $ | 0.288 | $ | 0.873 | $ | 0.850 |
| NFFO Payout Ratio | 71.0% | 67.1% | 71.5% | 71.0% | ||||
| NFFO Effective Payout Ratio | 46.2% | 48.1% | 48.0% | 53.3% | ||||
LIQUIDITY AND LEVERAGE
| As at September 30, | 2014 | 2013 |
| Total Debt to Gross Book Value | 46.80% | 49.42% |
| Total Debt to Gross Historical Cost (1) | 56.84% | 58.99% |
| Total Debt to Total Capitalization | 50.74% | 55.64% |
| Debt Service Coverage Ratio (times) (2) | 1.59 | 1.55 |
| Interest Coverage Ratio (times) (2) | 2.72 | 2.61 |
| Weighted Average Mortgage Interest Rate (3) | 3.66% | 3.79% |
| Weighted Average Mortgage Term to Maturity (years) | 6.5 | 5.8 |
| (1) | Based on historical cost of investment properties. |
| (2) | Based on the trailing four quarters ended September 30, 2014. |
| (3) | Weighted average mortgage interest rate includes deferred financing costs and fair value adjustments on an effective interest basis. Including the amortization of the realized component of the loss on interest rate hedge settlement of $32.5 million included in Accumulated Other Comprehensive Loss (''AOCL''), the effective portfolio weighted average interest rate at September 30, 2014 would be 3.82% (September 30, 2013 - 3.98%). |
Financial Strength
Management believes CAPREIT's strong balance sheet and liquidity position will enable it to continue to take advantage of acquisition and property capital investment opportunities over the long term.
CAPREIT is achieving its financing goals as demonstrated by the following key indicators:
- Maintained a conservative ratio of total debt to gross book value of 46.80% as at September 30, 2014;
- Debt service and interest coverage ratios for the quarter ended September 30, 2014 improved to 1.59 times and 2.72 times, respectively, compared to 1.55 times and 2.61 times, respectively, for the same period last year;
- As at September 30, 2014, 95.8% (September 30, 2013 - 92.0%) of CAPREIT's mortgage portfolio was insured by the Canada Mortgage and Housing Corporation ("CMHC"), excluding the mortgages on CAPREIT's MHC land lease sites, resulting in improved spreads on mortgages and overall lower interest costs than conventional mortgages.
- The effective portfolio weighted average interest rate on mortgages has steadily declined to 3.66% as at September 30, 2014 from 3.79% as at September 30, 2013, resulting in significant potential interest rate savings in future years;
- Management expects to raise between $600 million and $650 million in total mortgage renewals and refinancings in 2014 of which $563.8 million has been completed or committed as at November 11, 2014;
- The weighted average term to maturity of the mortgage portfolio has improved from 5.8 years at September 30, 2013 to 6.5 years as at September 30, 2014;
- As at September 30, 2014, CAPREIT has investment properties with a fair value of $213 million that are not encumbered by mortgages and secure only the Acquisition and Operating Facility. Unencumbered investment properties with a fair value over $54 million are expected to be financed reducing the total unencumbered investment properties to approximately $159 million;
Property Capital Investment Plan
During the nine months ended September 30, 2014, CAPREIT made property capital investments (excluding disposed properties, head office assets, tenant improvements and signage) of $95.1 million as compared to $101.5 million in the same period last year. For the full 2014 year, CAPREIT expects to complete property capital investments of approximately $165 million to $175 million, including approximately $87 million targeted at acquisitions completed since January 1, 2011 and approximately $22 million in high-efficiency boilers and other energy-saving initiatives.
Property capital investments include suite improvements, common areas and equipment, which generally tend to increase NOI more quickly. CAPREIT continues to invest in energy-saving initiatives, including boilers, energy-efficient lighting systems, and water-saving programs, which permit CAPREIT to mitigate potentially higher increases in utility and R&M costs and significantly improve overall portfolio NOI.
Additional Information
More detailed information and analysis is included in CAPREIT's unaudited condensed consolidated interim financial statements and MD&A for the three and nine months ended September 30, 2014, which have been filed on SEDAR and can be viewed at www.sedar.com under CAPREIT's profile or on CAPREIT's website on the investor relations page at www.capreit.net.
Conference Call
A conference call hosted by Thomas Schwartz, President and CEO and the CAPREIT Management Team, will be held Wednesday, November 12, 2014 at 10:00 am EST. The telephone numbers for the conference call are: Local/International: (416) 340-2216, North American Toll Free: (866) 225-0198.
A slide presentation to accompany Management's comments during the conference call will be available one hour and a half prior to the conference call. To view the slides, access the CAPREIT website at www.capreit.net, click on "Investor Relations" and follow the link at the top of the page. Please log on at least 15 minutes before the call commences.
The telephone numbers to listen to the call after it is completed (Instant Replay) are local/international (905) 694-9451 or North American toll free (800) 408-3053. The Passcode for the Instant Replay is 4966209#. The Instant Replay will be available until midnight, November 19, 2014. The call and accompanying slides will also be archived on the CAPREIT website at www.capreit.net. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net.
About CAPREIT
CAPREIT owns interests in multi-unit residential rental properties, including apartments, townhomes and manufactured home communities primarily located in and near major urban centres across Canada. As at September 30, 2014, CAPREIT had owning interests in 41,555 residential units, comprised of 35,373 residential suites and 29 manufactured home communities ("MHC") comprising 6,182 land lease sites. For more information about CAPREIT, its business and its investment highlights, please refer to our website at www.capreit.net and our public disclosure which can be found under our profile at www.sedar.com.
Non-IFRS Financial Measures
CAPREIT prepares and releases unaudited quarterly and audited consolidated annual financial statements prepared in accordance with IFRS. In this and other earnings releases and investor conference calls, as a complement to results provided in accordance with IFRS, CAPREIT also discloses and discusses certain non-IFRS financial measures, including Net Rental Revenue Run-Rate, NOI, FFO, NFFO and applicable per Unit amounts and payout ratios. These non-IFRS measures are further defined and discussed in the MD&A released on November 11, 2014, which should be read in conjunction with this press release. Since Net Rental Revenue Run-Rate, NOI, FFO and NFFO are not determined by IFRS, they may not be comparable to similar measures reported by other issuers. CAPREIT has presented such non-IFRS measures as Management believes these non-IFRS measures are relevant measures of the ability of CAPREIT to earn and distribute cash returns to Unitholders and to evaluate CAPREIT's performance. A reconciliation of Net Income and such non-IFRS measures including Adjusted Funds From Operations ("AFFO") is included in this press release. These non-IFRS measures should not be construed as alternatives to net income (loss) or cash flow from operating activities determined in accordance with IFRS as an indicator of CAPREIT's performance.
Cautionary Statements Regarding Forward-Looking Statements
Certain statements contained, or contained in documents incorporated by reference, in this press release constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to CAPREIT's future outlook and anticipated events or results and may include statements regarding the future financial position, business strategy, budgets, litigation, projected costs, capital investments, financial results, taxes, plans and objectives of or involving CAPREIT. Particularly, statements regarding CAPREIT's future results, performance, achievements, prospects, costs, opportunities and financial outlook, including those relating to acquisition and capital investment strategy and the real estate industry generally, are forward-looking statements. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative thereof or other similar expressions concerning matters that are not historical facts. Forward-looking statements are based on certain factors and assumptions regarding expected growth, results of operations, performance and business prospects and opportunities. In addition, certain specific assumptions were made in preparing forward-looking information, including: that the Canadian and Ireland economies will generally experience growth, however, may be adversely impacted by the global economy; that inflation will remain low; that interest rates will remain low in the medium term; that Canada Mortgage and Housing Corporation ("CMHC") mortgage insurance will continue to be available and that a sufficient number of lenders will participate in the CMHC-insured mortgage program to ensure competitive rates; that the Canadian capital markets will continue to provide CAPREIT with access to equity and/or debt at reasonable rates; that vacancy rates for CAPREIT properties will be consistent with historical norms; that rental rates will grow at levels similar to the rate of inflation on renewal; that rental rates on turnovers will remain stable; that CAPREIT will effectively manage price pressures relating to its energy usage; and, with respect to CAPREIT's financial outlook regarding capital investments, assumptions respecting projected costs of construction and materials, availability of trades, the cost and availability of financing, CAPREIT's investment priorities, the properties in which investments will be made, the composition of the property portfolio and the projected return on investment in respect of specific capital investments.
Although the forward-looking statements contained in this press release are based on assumptions, Management believes they are reasonable as of the date hereof, there can be no assurance actual results will be consistent with these forward-looking statements; they may prove to be incorrect. Forward-looking statements necessarily involve known and unknown risks and uncertainties, many of which are beyond CAPREIT's control, that may cause CAPREIT or the industry's actual results, performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, risks related to: reporting investment properties at fair value, real property ownership, leasehold interests, co-ownerships, investment restrictions, operating risk, energy costs and hedging, environmental matters, insurance, capital investments, indebtedness, interest rate hedging, foreign operation and currency risks, taxation, harmonization of federal goods and services tax and provincial sales tax, government regulations, controls over financial accounting, legal and regulatory concerns, the nature of units of CAPREIT ("Trust Units") and of CAPREIT's subsidiary, CAPREIT Limited Partnership ("Exchangeable Units") (collectively, the "Units"), unitholder liability, liquidity and price fluctuation of Units, dilution, distributions, participation in CAPREIT's distribution reinvestment plan, potential conflicts of interest, dependence on key personnel, general economic conditions, competition for residents, competition for real property investments, continued growth and risks related to acquisitions. There can be no assurance the expectations of CAPREIT's Management will prove to be correct. These risks and uncertainties are more fully described in regulatory filings, including CAPREIT's Annual Information Form, which can be obtained on SEDAR at www.sedar.com, under CAPREIT's profile, as well as under Risks and Uncertainties section of the MD&A released on November 11, 2014. The information in this press release is based on information available to Management as of November 11, 2014. Subject to applicable law, CAPREIT does not undertake any obligation to publicly update or revise any forward-looking information.
| SELECTED FINANCIAL INFORMATION | ||||
| Condensed Balance Sheets | ||||
| As at | September 30, 2014 |
December 31, 2013 |
||
| ($ Thousands) | ||||
| Investment Properties | $ | 5,645,043 | $ | 5,459,218 |
| Total Assets | 5,816,814 | 5,558,934 | ||
| Mortgages Payable | 2,657,790 | 2,457,182 | ||
| Bank Indebtedness | 80,337 | 187,030 | ||
| Total Liabilities | 2,893,842 | 2,801,465 | ||
| Unitholders' Equity | 2,922,972 | 2,757,469 | ||
| Condensed Income Statements | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| ($ Thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||
| Net Operating Income | 77,615 | 72,855 | 227,079 | 207,821 | |||||||||
| Trust Expenses | (4,602 | ) | (4,193 | ) | (15,971 | ) | (13,874 | ) | |||||
| Unrealized Gain on Remeasurement of Investment Properties | 71,737 | 5,597 | 108,874 | 50,036 | |||||||||
| Realized Gain on Disposition of Investment Properties | - | (883 | ) | - | (883 | ) | |||||||
| Remeasurement of Exchangeable Units | (117 | ) | 352 | (377 | ) | 663 | |||||||
| Unit-based Compensation (Expenses) Recoveries | (3,565 | ) | 5,683 | (10,860 | ) | 9,358 | |||||||
| Interest on Mortgages Payable and Other Financing Costs | (25,753 | ) | (23,717 | ) | (74,598 | ) | (70,860 | ) | |||||
| Interest on Bank Indebtedness | (972 | ) | (1,741 | ) | (4,350 | ) | (4,725 | ) | |||||
| Interest on Exchangeable Units | (46 | ) | (46 | ) | (139 | ) | (151 | ) | |||||
| Other Income | 2,173 | 796 | 5,587 | 4,061 | |||||||||
| Amortization | (598 | ) | (561 | ) | (1,788 | ) | (1,600 | ) | |||||
| Unrealized and Realized Loss on Derivative Financial Instruments | (113 | ) | (449 | ) | (2,763 | ) | (527 | ) | |||||
| Gain (Loss) on Foreign Currency Translation | 1,842 | (24 | ) | 4,522 | (30 | ) | |||||||
| Net Income | 117,601 | 53,669 | 235,216 | 179,289 | |||||||||
| Other Comprehensive Income (Loss) | $ | (4,054 | ) | $ | 1,798 | $ | (4,244 | ) | $ | 1,806 | |||
| Comprehensive Income | $ | 113,547 | $ | 55,467 | $ | 230,972 | $ | 181,095 | |||||
| Condensed Statements of Cash Flows | ||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| September 30, | September 30, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||
| ($ Thousands) | ||||||||||||||
| Cash Provided By Operating Activities: | ||||||||||||||
| Net Income | $ | 117,601 | $ | 53,669 | $ | 235,216 | $ | 179,289 | ||||||
| Items in Net Income Not Affecting Cash: | ||||||||||||||
| Changes in Non-cash Operating Assets and Liabilities | 6,964 | (3,067 | ) | 1,154 | (17,463 | ) | ||||||||
| Realized and Unrealized Gain on Remeasurements | (71,507 | ) | (4,617 | ) | (105,734 | ) | (49,289 | ) | ||||||
| Gain on Sale of Investments | - | - | (717 | ) | (1,737 | ) | ||||||||
| Unit-based Compensation Expenses | 3,565 | (5,683 | ) | 10,860 | (9,358 | ) | ||||||||
| Items Related to Financing and Investing Activities | 22,781 | 23,562 | 70,447 | 69,687 | ||||||||||
| Other | 632 | 2,668 | 1,740 | 5,021 | ||||||||||
| Cash Provided By Operating Activities | 80,036 | 66,532 | 212,966 | 176,150 | ||||||||||
| Cash Used In Investing Activities | ||||||||||||||
| Acquisitions | (14,164 | ) | (205,734 | ) | (25,661 | ) | (318,879 | ) | ||||||
| Capital Investments | (42,063 | ) | (40,562 | ) | (118,072 | ) | (102,433 | ) | ||||||
| Disposition of Investments | - | - | 7,599 | 7,815 | ||||||||||
| Dispositions | - | 57,599 | - | 57,599 | ||||||||||
| Other | 1,840 | (54 | ) | 2,188 | (146 | ) | ||||||||
| Cash Used In Investing Activities | (54,387 | ) | (188,751 | ) | (133,946 | ) | (356,044 | ) | ||||||
| Cash (Used) Provided By Financing Activities | ||||||||||||||
| Mortgages, Net of Financing Costs | 58,184 | 130,010 | 168,906 | 236,783 | ||||||||||
| Bank Indebtedness | (37,491 | ) | 37,235 | (109,542 | ) | 81,640 | ||||||||
| Interest Paid | (24,658 | ) | (23,882 | ) | (73,296 | ) | (70,669 | ) | ||||||
| Hedge Settlement | - | - | - | (3,492 | ) | |||||||||
| Proceeds on Issuance of Units | 311 | 511 | 695 | 1,296 | ||||||||||
| Distributions, Net of DRIP and Other | (21,995 | ) | (21,655 | ) | (65,783 | ) | (65,664 | ) | ||||||
| Cash (Used) Provided By Financing Activities | (25,649 | ) | 122,219 | (79,020 | ) | 179,894 | ||||||||
| Changes in Cash and Cash Equivalents During the Period | - | - | - | - | ||||||||||
| Cash and Cash Equivalents, Beginning of Period | - | - | - | - | ||||||||||
| Cash and Cash Equivalents, End of Period | $ | - | $ | - | $ | - | $ | - | ||||||
| SELECTED NON-IFRS FINANCIAL MEASURES | |||||||||||||
| Reconciliation of Net Income to FFO and to NFFO | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30, | September 30, | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| ($ Thousands, except per Unit amounts) | |||||||||||||
| Net Income | $ | 117,601 | $ | 53,669 | $ | 235,216 | $ | 179,289 | |||||
| Adjustments: | |||||||||||||
| Unrealized Gain on Remeasurement ofInvestment Properties | (71,737 | ) | (5,597 | ) | (108,874 | ) | (50,036 | ) | |||||
| Realized Gain on Disposition of Investment Properties | - | 883 | - | 883 | |||||||||
| Remeasurement of Exchangeable Units | 117 | (352 | ) | 377 | (663 | ) | |||||||
| Remeasurement of Unit-based Compensation Liabilities | 2,546 | (6,358 | ) | 7,481 | (11,189 | ) | |||||||
| Interest on Exchangeable Units | 46 | 46 | 139 | 151 | |||||||||
| Corporate taxes expense | - | - | 1,405 | - | |||||||||
| (Gain) Loss on Foreign Currency Translation | (1,842 | ) | 24 | (4,522 | ) | 30 | |||||||
| FFO Adjustment for Income from Equity Accounted Investments | (1,573 | ) | - | (1,573 | ) | - | |||||||
| Amortization of Property, Plant and Equipment | 598 | 561 | 1,788 | 1,600 | |||||||||
| FFO | $ | 45,756 | $ | 42,876 | $ | 131,437 | $ | 120,065 | |||||
| Adjustments: | |||||||||||||
| Unrealized and Realized Loss on Derivative Financial Instruments | 113 | 449 | 2,763 | 527 | |||||||||
| Amortization of Loss from AOCL to Interest and Other Financing Costs | 838 | 840 | 2,487 | 2,437 | |||||||||
| Net Mortgage Prepayment Cost | - | 98 | 763 | 1,739 | |||||||||
| Realized Gain on Sale of Investments | - | - | (717 | ) | (1,737 | ) | |||||||
| NFFO | $ | 46,707 | $ | 44,263 | $ | 136,733 | $ | 123,031 | |||||
| NFFO per Unit - Basic | $ | 0.426 | $ | 0.440 | $ | 1.252 | $ | 1.227 | |||||
| NFFO per Unit - Diluted | $ | 0.420 | $ | 0.435 | $ | 1.235 | $ | 1.210 | |||||
| Total Distributions Declared (1) | $ | 33,184 | 29,682 | $ | 97,707 | $ | 87,361 | ||||||
| NFFO Payout Ratio (2) | 71.0% | 67.1% | 71.5% | 71.0% | |||||||||
| Net Distributions Paid (1) | $ | 21,587 | $ | 21,304 | $ | 65,587 | $ | 65,528 | |||||
| Excess NFFO Over Net Distributions Paid | $ | 25,120 | $ | 22,959 | $ | 71,146 | $ | 57,503 | |||||
| Effective NFFO Payout Ratio (3) | 46.2% | 48.1% | 48.0% | 53.3% | |||||||||
| (1) | For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the three and nine months ended September 30, 2014. |
| (2) | The payout ratio compares distributions declared to NFFO. |
| (3) | The effective payout ratio compares net distributions paid to NFFO. |
| Reconciliation of NFFO to AFFO | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| September 30 | September 30 | ||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| ($ Thousands, except per Unit amounts) | |||||||||||||
| NFFO | $ | 46,707 | $ | 44,263 | $ | 136,733 | $ | 123,031 | |||||
| Adjustments: | |||||||||||||
| Provision for Maintenance Property Capital Investments (1) | (3,878 | ) | (3,749 | ) | (11,577 | ) | (11,247 | ) | |||||
| Amortization of Fair Value on Grant Date of Unit-based Compensation | 1,019 | 675 | 3,379 | 1,831 | |||||||||
| AFFO | $ | 43,848 | $ | 41,189 | $ | 128,535 | $ | 113,615 | |||||
| AFFO per Unit - Basic | $ | 0.400 | $ | 0.410 | $ | 1.177 | $ | 1.133 | |||||
| AFFO per Unit - Diluted | $ | 0.394 | $ | 0.404 | $ | 1.161 | $ | 1.117 | |||||
| Distributions Declared (2) | $ | 33,184 | $ | 29,682 | $ | 97,707 | $ | 87,361 | |||||
| AFFO Payout Ratio (3) | 75.7% | 72.1% | 76.0% | 76.9% | |||||||||
| Net Distributions Paid (2) | $ | 21,587 | $ | 21,304 | $ | 65,587 | $ | 65,528 | |||||
| Excess AFFO over Net Distributions Paid | $ | 22,261 | $ | 19,885 | $ | 62,948 | $ | 48,087 | |||||
| Effective AFFO Payout Ratio (4) | 49.2% | 51.7% | 51.0% | 57.7% | |||||||||
| (1) | An industry based estimate (see the Non-IFRS Measures section in the MD&A for the three and nine months ended September 30, 2014). |
| (2) | For a description of distributions declared and net distributions paid, see the Non-IFRS Financial Measures section in the MD&A for the three and nine months ended September 30, 2014. |
| (3) | The payout ratio compares distributions declared to AFFO. |
| (4) | The effective payout ratio compares net distributions paid to AFFO. |
Contact Information:
Mr. Michael Stein
Chairman
(416) 861-5788
CAPREIT
Mr. Thomas Schwartz
President & CEO
(416) 861-9404
CAPREIT
Mr. Scott Cryer
Chief Financial Officer
(416) 861-5771
www.capreit.net